Garuda's new boss to limit operations, renegotiate debt

Garuda's new boss to limit operations, renegotiate debt

JAKARTA (JP): National flag carrier Garuda Indonesia's newly
appointed president Robby Djohan announced yesterday a massive
restructuring plan to lift the ailing airline out of its
financial crisis.

Robby said he would downsize operations and asked foreign
creditors for a postponement of debt payments to boost efficiency
and reduce the airline's financial burden.

"My priority is to restructure the organization," said the
former president of Bank Niaga.

The sharp depreciation of the rupiah against the U.S. dollar
has dealt a huge blow to the airline industry, in which about 80
percent of operational costs are in dollars.

Robby has yet to decide how many airplanes to shed, but
indicated that 30 might be sufficient in the current sluggish
market conditions.

"What is important is to achieve efficency because we have to
be a market-oriented operation," he said.

Garuda currently operates 57 aircraft, and is planning to
return six of its leased planes.

"Downsizing the company will be a difficult job," Robby said,
but added that there would be no layoffs, stressing that
employees would be transferred to Garuda's subsidiaries and other
operations which have links with the the airlines.

He also said that he would negotiate with foreign creditors to
postpone the debt repayment.

"But we're committed to paying our debts," he said.

Garuda has debts of US$200 million, half of which are due to
be repaid this year.

State Minister of the Empowerment of State Enterprises Tanri
Abeng said last week that Garuda was in a critical condition,
stressing the need for both management and financial
restructuring.

In addition to a new president, Garuda also got three new
directors.

"The new management team will try to rebuild the image of
Garuda as a very competitive airline, reliable and safe," Robby
said.

He said that he would rid the company of corruption and
nepotism including reviewing past contracts which were signed
without being based on business considerations.

"You can't work in an organization branded with corruption and
nepotism," he said.

After being pressured by its employees, Garuda announced last
week that it would sever links with companies linked to the
family of former president Soeharto.

Robby said Garuda could no longer operate as it had in the
past, because the government could not afford to finance a bail
out due to the current economic crisis.

"Garuda must now be managed with its own resources," he said,
pointing out that the management would motivate its staff to be
more disciplined.

He said that foreign strategic partners which have cash and
technology were welcome to invest in the airline.

Former Garuda president Soepandi he was confident that Robby
could turn around the airline from its current troubles.

Indonesia's five operating commercial airlines, including
Garuda, announced last week that they plan to combine their
resources and unite their domestic services to survive the
deepening economic crisis. (rei)